3 - Life Insurance Policies - Provisions, Options and Riders (Chapter Exam 1 - Life Policies)

Which of these life products is NOT considered interest-sensitive?

Modified whole life

What type of life insurance are credit policies issued as?

Term

Q is looking to buy a life insurance policy that will provide the greatest amount of protection for a temporary time period. Which of these policies should Q purchase?

Term life

Which of these is an element of a variable life policy

a fixed, level premium

Which statement is correct regarding the premium payment schedule for whole life policies?

Premiums are payable throughout the insured's lifetime/ coverage lasts until death of insured

Which of the following actions is NOT possible with a Universal Life policy

Premiums may be applied as a credit against income tax

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?

conversion provision

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

level term

A 15-year mortgage is best protected by what kind of policy

15-year decreasing term

Which of the following types of term policies most likely contains a renewability feature?

20 year convertible term

J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value?

20-pay life... the shorter the pay period, the faster the cash value growth

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?

Decreasing term policy

J issued a Life insurance policy with a death benefit of $100,000. She pays $600 per year in premium for the first 5 years. The premium then increases to $900 per year in the sixth year, and remains level thereafter. The policy's death benefit also remains at $100,000. Which type of life insurance policy is this?

Modified premium life

All of these statements about Equity Indexed Life Insurance are correct EXCEPT

The premiums can be lowered or raised, based on investment performance.... NO! Equity indexed life insurance is permanent life insurance that allows policyholders to tie accumulation values to a stock market index

K purchased a Life insurance policy in 1986 which paid 10% interest in the early years of the policy. Twenty years after the purchase, she received a notice from the insurer stating that the policy will soon terminate unless a much-higher premium is paid because of falling interest rates. This type of policy is known as a(n) _________ life policy.

Universal... popular in the 80s worked as advertised for years, when interest rates were in the high single digits and above. interest rates have since taken a dramatic fall, which negatively affected the performance of Universal Life policies issued in the 80s. This ultimately resulted in the policy owner paying a much higher premium due to the increased cost of the underlying Term life policy and having no cash value to offset the premiums.

K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?

level

Which of these needs is satisfied by Adjustable Life insurance?

Insured's need for flexible premiums

Which of these would be considered a Limited-Pay Life policy?

Life Paid-Up at Age 70

Which type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified Endowment Contract

G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?

10 years